Glass–Steagall Act
The Glass-Steagall Act was a law that was passed a long time ago in 1933. This law was made to make sure that banks did not use people's money to take risky investments like buying stocks.
Before this law, banks were allowed to use people's savings to invest in the stock market. This meant that if the bank lost money on those investments, people who had their savings in that bank would lose their money too.
So, the Glass-Steagall Act separated commercial banks (which deal with people's savings) from investment banks (which deal with risky investments like buying stocks). This way, commercial banks could only use people's savings for safe things like giving loans to people who wanted to buy a house or a car.
The Glass-Steagall Act helped prevent another big financial crisis like the Great Depression, which happened right before this law was passed. However, in 1999, the law was repealed, which many people believe led to the financial crisis of 2008.
Before this law, banks were allowed to use people's savings to invest in the stock market. This meant that if the bank lost money on those investments, people who had their savings in that bank would lose their money too.
So, the Glass-Steagall Act separated commercial banks (which deal with people's savings) from investment banks (which deal with risky investments like buying stocks). This way, commercial banks could only use people's savings for safe things like giving loans to people who wanted to buy a house or a car.
The Glass-Steagall Act helped prevent another big financial crisis like the Great Depression, which happened right before this law was passed. However, in 1999, the law was repealed, which many people believe led to the financial crisis of 2008.